Irish Financial Independence & Personal Finance Podcast

Review of my third full year of investing - 2020

Monday 4th January 2021

Throw any plans out the window - in 2020 along came COVID and the whole world got turned upside down.

Much of what I had planned for 2020 never actually happened. The year started out normal enough, but things changed pretty quickly.

The Peer to Peer Lending Industry Loses Credibility

It turns out the P2P Lending was simply too good to be true. In early 2020 Envestio and Grupeer both turned out to be scams and disappeared, taking millions of euro with them. By the time the dust settled, I lost around €5,500, the majority of that coming from investment in Grupeer.

While Mintos thankfully isn’t a scam, I wasn’t left untouched there either - with a good chunk of loans written off as a few of the third party lenders they used went bust. Minto’s is still trying to recover a lot of this money, but I expect more write offs ahead in 2021.

My honest advice after three years of investing in Peer to Peer Lending - stay away from it! While I have some loans still left, I plan to get out of P2P in 2021.

Trading Forex and my €6,000 Loss

It was hard being me in early 2020. I stupidly got too confident with my Forex trading and ended up shorting gold at a time when shorting gold wasn’t a good idea. Rather than setting a stop loss and walking away, I continued to add more positions to my losing trade, until my account got so out of hand that I had no other choice but to close my trades.

While I did manage to recover around half this loss by the end of the year, I have since reduced the amount that I am trading.

March 2021 Update: I stop trading my own capital in early 2021 when I realise that the time taken to trade simply isn't worth it.

Writing off Christmas Tree Investment

In February I received a €16,000 payment from Walker Forestry for one of our deals with them that had been due to end. It was like getting blood from a stone to get the payment through and it was pretty obvious that I was caught up in a scam.

By the end of the year, I wrote off my remaining balance with Walker Forestry. Thankfully, it was only a €1,500 loss overall.

January 2023 Update: I was indeed correct, and Walker Forestry was indeed a scam and the Irish Company has since become insolvent.

Stocks in 2020

After an initial crash in March 2020, the sharemarket bounced back nicely and I was in the black for 2020. I plan on continuing to invest heavily in my pensions in 2021.

Cryptocurrency Investment

I bought a very small amount of Bitcoin during the end part of 2020. I just found it too hard to sit on the sidelines while everyone was talking about Bitcoin. I figured a small position of less than 1% of my portfolio wouldn’t hurt.

January 2023 Update: Bitcoin is indeed a scam and I soon realised this in 2021 and sold all my Bitcoin. Please don’t buy cryptocurrency - it isn’t an investment, it is nothing other than speculation.

Returning to Work Full Time

Probably the biggest surprise for me in 2020, was returning to full time work. This was a little bit of an accident and on reflection, was largely due to COVID.

When COVID first hit in March 2020, I started to actually worry that I would have no work. Freelance clients that I had been working with for many years were worried that they might go out of business. Thankfully at the time, I was only working three hours per day anyway, so it wasn’t a case that I needed to fill a full time schedule, so I was able to balance things out at least initially after an initial shock, though work was definitely nearly non-existent in March and April.

However, by the end of April, those clients that first feared going out of business had quite the opposite outcome. One of my clients, a New Zealand based eCommerce business, saw their orders increase 5 times over. They suddenly needed software upgrades - and quickly.

In fact, all of my clients needed software solutions delivered faster than ever before. While I was nowhere near the front line, I felt that my contribution to COVID was that I could at least help these businesses, and so I quickly broke out from my semi-retired lifestyle, to return to work full time to write code.

This resulted in me earning a lot more money than I expected and by the end of the year, I had started to push our monthly contributions up considerably. I ended up adding a little under €30k to our portfolio in 2020.

The other big change from a work point of view, is that I started to notice a lot more remote working opportunities since COVID. I have been working from home since 2004, remote work has been the norm for me, but I have found a lot more opportunities coming through LinkedIn. I will continue to work full time in 2021 and am excited about the potential opportunities that might come.

While I did love my time working part time and casual hours between 2018 to early 2020, I came to the conclusion during the year that I needed to take my FIRE journey a little more seriously and work harder to make larger monthly contributions.

I also started to appreciate the fact that I am able to generate a good income from software development and that I need to continue to try to increase my income in the hope that I can increase my monthly contributions over time.

Becoming a Landlord

Definitely the biggest unexpected change, was becoming a landlord in 2020. When COVID hit, my wife and I saw it as an opportunity to move house. With three kids, we had outgrown our 3 bedroom, semi detached house and while we had been thinking about moving before COVID, we decided to take the opportunity once COVID arrived.

By July, the real estate market was dead and we were able to put a lowish offer on a 4 bedroom house in Castletroy in Limerick. The house had been rented previously to students, but with so much doubt now with COVID, the house had been put on the market.

Our offer was accepted, and somehow we were able to put a deal together where we were able to move into the new house, and keep our old house - turning it into a rental property. I recorded a podcast episode about this that you can listen to here.

The new tenant didn’t move in until December, but we are excited to have been able to put the deal together and I am looking forward to seeing what it is like being a landlord.

From a portfolio point of view, the biggest change was that we did an equity release, which resulted in a little over €40,000 being added to our portfolio.

Launching a Co-Op to Establish Native Forests

Definitely the coolest thing I did in 2020 was to co-found a co-op which purchases land to plant and establish native forests. We ended up purchasing one site in Co. Roscommon, with the hope to plant 8,000 native trees on the site next year. The project is volunteer led, but has the added bonus of providing a tax free return for shareholders from the forestry premiums that are paid for establishing new native woodlands. For more information, checkout An Dúlra.

Defining my FI Number

2020 marked 3 years since we started my FIRE journey and with that I gave a little more thought to my big FI number. Our pre COVID annual expenses were around €40k per year, but COVID showed just how much that can be reduced when you cut back. As it is, at the moment I am focusing on building a Lean FIRE portfolio of around €600k, that would at least ensure we cover our basic expenses. I expect to explore this a little more in 2021.

Recording Portfolio Updates Monthly

2020 was such an exciting year in terms of portfolio updates and now that I am working full time again and contributing a lot more to my portfolio, I thought I would start recording updates monthly from next month.

2020 Portfolio Report

Portfolio Summary (as at 31st December 2020)
Opening Balance €62,544.93
New Contributions €28,243.13
Equity Release €41,220.21
Portfolio Growth -€6,459.00
Closing Balance €125,549.27

Yearly Portfolio Growth Report

Yearly Portfolio Growth Report
Equities Capital Gains + Dividends €3,377.88
Cryptocurrency Capital Gain €182.83
Loss on Christmas Tree Investment -€1,500.00
Forex Trading Income -€2,988.17
P2P Lending Interest Income -€5,531.54
Total Growth -€6,459.00
Annualised % Return -4.89%

Portfolio Breakdown

The table below shows the breakdown of my portfolio into the various asset classes:

Portfolio Asset Breakdown (as at 31st December 2020)
Real Estate €62,485.12 49.77%
Equities €57,701.25 45.96%
Peer to Peer Lending €1,791.17 1.43%
Forex Trading Account €645.77 0.51%
Cryptocurrency €268.72 0.21%
Cash €2,657.24 2.12%
Total €125,549.27 100%

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